4 questions to consider about insurance extensions

4 questions to consider about insurance extensions

President Barack Obama is trying to make it possible for Americans to keep their health insurance coverage if they like it. But his now infamous promise may not be realistic.

Obama said Thursday that insurers should be allowed to continue selling individual coverage plans that would be deemed substandard under the health care overhaul to existing customers. The decision came after millions of people received cancellation notices alerting them that their plans would not have complied with overhaul coverage requirements set to begin next year.

A day later, the House of Representatives voted to let insurers sell those existing plans to new as well as existing customers. That bill now goes to an uncertain fate in the Senate.

Insurance experts say there are a number of obstacles that could keep insurers from letting customers renew old policies that the companies had planned to scrap for 2014. Here's what you need to know if you have received a cancellation notice:

WHAT WILL MY INSURER DO?

Your insurer likely doesn't know yet.

Several companies said shortly after Obama's announcement that they were still trying to understand the implications behind it. Obama planned to meet with health insurance CEOs on Friday.

Aetna Inc., the nation's third largest health insurer, plans to extend some of its cancelled policies, but it hasn't elaborated on that. The Hartford, Conn., insurer covers more than 22 million people, but only a small slice of that is individual insurance.

Robert Laszewski, a health care industry consultant, said he expects other insurers to make a decision over the next couple days on whether to let customers renew policies that they had decided to scrap.

CAN'T INSURERS JUST CONTINUE THE COVERAGE THEY HAD IN PLACE?

The decision is far more complex.

For starters, insurers would need to figure out how much to charge since they haven't set premiums, or the price of coverage, for plans they expected to scrap. They have to consider how the coverage will be used and how prices have risen before settling on what they need to collect to cover future claims.

They also have to send letters to customers with cancelled policies, telling them that the coverage can now be renewed. They also have to inform customers who want to keep canceled plans about any protections that are now required by the overhaul but that are not included under the old plans.

Insurers then have to wait for customers to decide whether to keep the coverage and respond. Then they must finalize their rates, change their billing for the different rates and reissue the policies.

All this adds up several months of work. But insurers would have to do all this in about 30 days in order to have coverage ready to start on Jan. 1.

ARE THERE OTHER REASONS AN INSURER CAN'T KEEP MY PLAN?

Yes.

State insurance regulators have to decide whether to allow insurers to do this. Many haven't made that call yet. Washington regulators have already said they will not allow insurers to extend their policies.

Aetna spokeswoman Susan Millerick said the company needs help from state regulators "to remove barriers that would make it difficult to make this change in such a short period of time."

WHAT CAN I DO IF I DON'T GET TO RENEW MY COVERAGE?

Customers still have until Dec. 15 to use the overhaul's insurance exchanges to sign up for health insurance coverage that starts in January. The premiums they find may be higher because the law requires more extensive coverage than what some plans currently offer. But customers also may be eligible for income-based tax credits to help them foot the bill.

Many insurers also are letting policyholders renew their coverage early, which would let them keep their plans through most of 2014.

Customers who do not qualify for a subsidy also should look beyond the overhaul's exchanges. They only show plans for which subsidies can be used, and an insurer may make other options available in the policyholder's state.